by Andrew Flake
Courtesy of a new puppy, I possess a large and growing collection of unmatched shoes. Some have laces or tongues gnawed, some have holes chewed in them, some have been spirited away and are missing entirely. By any measure, multiple lost or damaged shoes are a problem, but…a puppy gets a pass. She attrition lies well-inside the range of expected puppy behavior, measured by the usual (very forgiving) puppy standards.
In this week’s case, an employment law dispute, the Eleventh Circuit majority had its own choice of standards, between one more and one less deferential to the arbitrator.
The dispute involved payments that Laurence Bonday, a former employee of Nalco Company (an Ecolab subsidiary), claimed he was owed under the Ecolab severance plan. Importantly, severance plans were available only for director-level positions.
After a reorganization that resulted in Bonday’s position changing from “Director of Technology” to technical consultant, Bonday expressed interest in a severance package but was told he was not eligible. He took the issue up with company HR with no success, deciding then to leave the company.
He filed a pro se demand for arbitration in December 2020. The Ecolab Arbitration Agreement, on which he relied, provided arbitration under AAA’s Employment Arbitration Rules of certain disputes, defined as “any and all claims or controversies alleging violations of federal, state, local or common law between an Associate and the Company (and vice versa) arising out of or in any way related to the application for employment, employment or cessation of employment with the Company, including all previously unasserted claims prior to the date of this Agreement. …“, with examples provided.
The same clause then excluded from the definition of disputes “claims related to: (i) workers’ compensation benefits; (ii) unemployment compensation benefits; [and] ([iii]) controversies over awards of benefits or incentives under the Company’s stock [*6] option plans, employee benefits plans or welfare plans that contain an appeal procedure or other procedure for the resolution of such controversies. . . .…”
Here’s what Bonday said in his Demand:
My role as Global Director of Tissue was eliminated and I was demoted to Senior ITC (a role I had never held) during a headcount reduction & reorganizing “leveling” event. I requested severance at the time, but was denied. I am requesting arbitration for Nalco Water to follow the Ecolab Severance Policy and award me 36 weeks salary per the policy. Please see attached additional pages for details.…” (emphasis added).
In looking at the language of the Demand above, with the benefit of hindsight and knowing how the arbitration played out, we can see some ambiguity, at the least, as to whether Bonday is requesting 1) a determination of his eligibility for participation in the status plan, or 2) an award of the severance he believes he is owed, or 3) both.
Nalco took the position that the claims were not arbitrable at all, and after arguing the issue with AAA staff, decided not to participate in the arbitration and did not pay the company’s share of the required AAA administrative fees.
Because Bonday had complied with all filing requirements, apparently also paying Nalco’s share, the arbitration proceeded. The arbitrator convened a case management conference, at which Bonday but not Nalco appeared.
Nalco instead filed a lawsuit in federal district court, in the Middle District of Florida, seeking declaratory judgment that the claims were not arbitrable and an injunction against the arbitration. The district court denied the motion because it lacked jurisdiction but noted as well that if Nalco believed an award were outside the scope of the arbitration agreement, it would have an adequate remedy at law in the form of a motion to vacate.
Shortly thereafter, and in the same November 2021 time frame, Nalco also filed a motion with AAA to stay the arbitration, which the arbitrator denied. At the same time, the arbitrator addressed Nalco’s jurisdictional arguments, suggesting that Nalco’s focus had been too limited because “Nalco has ignored the other possible claims raised by [Mr. Bonday], who has proceeded in this forum pro se” (emphasis added). The arbitrator went on:
Mr. Bonday] has repeatedly stated he was not treated the same as other similarly situated employees who were given the requested benefits. As noted by [Nalco] in its motion [to stay], the plan itself was created pursuant to [ERISA]. As such, [Mr. Bonday] may be raising violations of ERISA for the disparate treatment. [Mr. Bonday] also recited his age, so he may also be claiming age discrimination under state or federal law. (emphasis added). Therefore, even assuming, arguendo, [Nalco] is correct as to a breach of contract claim, it does not foreclose the arbitration of other claims raised by [Mr. Bonday], which are covered by the parties’ arbitration agreement. Therefore, this process will continue.…
The dispute then proceeded on two tracks. In the District Court, on November 16, 2021, Nalco amended its claim to address subject matter jurisdiction, and filed a motion for summary judgment that the Bonday claim was not arbitrable. Bonday answered and moved to dismiss.
On December 31, the arbitrator conducted a final hearing. The arbitrator found that she lacked jurisdiction to decide the breach of contract claim under the severance plan, and that Bonday had not proven age discrimination, but she did award $129,465.50 on an ERISA claim, made up of approximately $122,000 in equitable relief under ERISA plus fees and costs.
The consideration of an ERISA claim at all is what led the district to vacate the award and the Eleventh Circuit to confirm that vacatur. But here we come to the standards questions, and what troubled Judge Tjoflat in dissent from the Eleventh Circuit majority opinion.
In vacating the arbitration award, the district court first found that “the plain and ordinary reading of the Arbitration Agreement here readily shows that the parties did not intend to arbitrate arbitrability.…” In so ruling, however, the district court did not take into account Rule 7 of the Employment Arbitration Rules, under which the arbitrator has the power to rule on her own jurisdiction, including on objections concerning scope and Terminix Int’l Co. Ltd. P’ship v. Palmer Ranch Ltd. P’ship, in which the Eleventh Circuit determined that by “incorporating the AAA Rules [including counterpart to Rule 7] into their agreement, the parties clearly and unmistakably agreed” that the arbitrator should decide whether the arbitration clause was valid…”” to have the arbitrator decide arbitrability. Terminix Int’l Co. Ltd. P’ship v. Palmer Ranch Ltd. P’ship, 432 F.3d 1327, 1329, 19 Fla. L. Weekly Fed. C 129 (11th Cir. 2005).
The district court went on to decide the scope issue independently, on a de novo basis using the summary judgment standard, with no deference to the arbitrator. Reaching a different conclusion, the court held that Bonday had not submitted any ERISA claim in the arbitration and that the claims that were submitted were not arbitrable. As a result, on what it communicated were the same grounds, the district court granted Nalco’s summary judgment motion and vacated the award under Section 10(s) of the Federal Arbitration Act (FAA) for the arbitrator’s exceeding her powers.
In a per curiam opinion, the Eleventh Circuit affirmed on the District Court on the second ground, that the arbitrator had exceeded her powers in granting relief on a claim (the ERISA claim) that was not before her. The majority focused only on the demand itself, which had never been formally amended, and not what Bonday apparently contended, which is that he had indeed raised the ERISA claim at final hearing.
In dissent, Judge Tjoflat contended stridently that the award should been reviewed under Section 10 of the FAA for whether the arbitrator “(even arguably) interpreted the parties’ [Agreement and the AAA Rules], not whether [she] got its meaning right or wrong,” and not on a de novo basis. Because that would include the arbitrator’s decision about whether and to what extent an ERISA claim had been raised — the award should have been affirmed.
It is a sound critique. Looking at the language of Bonday’s pro se demand, it is understandable that a court, as did the Middle District, might come to a different conclusion than the arbitrator about what claims had been asserted, initially or by amendment, and whether they fell within Ecolab Arbitration Agreement’s scope. In the dissent’s view, this was impermissible second-guessing: “in failing to consider the [AAA] rules at all, the District Court effectively co-opted the arbitrator’s role for itself. That is manifestly not what Congress intended when it enacted the FAA, and it is not the process the parties bargained for.…”
Because of its procedural wrinkles, and the majority opinion’s relative brevity, I do not see Nalco as having any import beyond its particular facts. As discussed here, though, it does provides a useful case study in the import of the FAA’s standard of post-award review. Standards matter.
And both Nalco v. Bonday and the Georgia Supreme Court’s Docs of CT, LLC v. Biotek opinion discussed last week, can be grouped together as cases in which the participation of a self-represented party, and an arbitrator’s efforts to accommodate that party, had a material influenced on the post-award outcome. ABF
[The case is Nalco Co. Ltd. Liab. Co. v. Bonday, No. 22-13546, 2025 U.S. App. LEXIS 17088, at *1 (11th Cir. July 10, 2025).]